As we head into Friday, U.S equity markets find themselves little changed from last Friday.

It’s peculiar given the pace of news coming out of Washington and the Fed. What is becoming apparent is that risk appetite is souring, but there is apparently enough optimism to keep the markets in a status quo pattern.

It’s interesting that the VIX index trading range has been between 10.58 and 13.22 the entire year to date. Friday will look to change that as three big events continue to take shape. First, Senate Republicans enacted the “Nuclear Option” to get Neil Gorsuch on the threshold of the Supreme Court. Second, on Thursday night the U.S. launched a missile strike into a Syria Government controlled military facility located in Idlib Provence in response to the earlier in the week chemical weapon sarin gas attack that brutally killed dozens of innocent civilians. Thursday night’s missile strikes immediately rallied crude oil pricing by as much as 2% and investors moved into the safety of bonds With that, Trump’s vision of improved Russian relations became increasingly foggy.

Finally, as this note is being published in advance of market open, Friday morning financial markets and investors will focus on March payrolls, which will likely be buffeted by the economic numbers over the week, which showed some modest improvement in ISM Employment, ADP employment change and Durable goods orders. A decline in March Auto sales is worth keeping an eye on. The decline may be rate-related, as higher interest rates take away a major sales incentive. Before Thursday’s night’s missile attack and Friday’s employment report the largest event was Wednesday’s release of the March 15th FOMC meeting minutes. Coming on the heels of Jeffrey Lacker’s surprise resignation, the Fed signaled it is planning on unwinding some balance sheet positions and they are looking at a 2H rate increase. The result was the S&P 500 and Dow posting their biggest one-day reversal since February 2016 on Wednesday.

Looking ahead to the Easter shorten week, the economic and earnings calendar are light. Highlights economically on Thursday are March PPI numbers and April’s Michigan sentiment readings. 1Q earnings season begins the following week. Just a handful of earnings are due for Thursday, which include PNC financial, JP Morgan, Wells Fargo and Citigroup. Federal Reserve Chair Janet Yellen speaks at the University of Michigan’s Ford School of Public Policy and will take questions from the audience on Monday in a quite week for Fed watchers.

With the exception of the constant flow of news out of Washington, the markets will be digging for actionable news and direction. The importance of 1Q earnings cannot be overlooked. With Affordable Care Act version 2.0 dead and comments from Washington that “a new tax plan is quite some time away”, investors will need to see earnings growth to justify current valuations. Lack of earnings growth could certainly trigger the “Sell in May and go away” strategy, but would an executive order here, and a nuclear option there be enough to keep investors hanging in the market?

Whatever you do to gain success, you have to hang in there and hope good things happen. “Always think positive.” Don Rickles May 8, 1926 – April 6, 2017

Larry Peruzzi

Managing Director International Trading

Mischler Financial Group

Investment Banking | Institutional Brokerage

Ph: 1-617-420-8472

Larry Peruzzi is a 20 yr global trading markets veteran and brings a unique perspective to global equities market commentary via Mischler Financial Group, the securities industry’s oldest minority broker-dealer owned and operated by service-disabled veterans. Larry’s experience and best execution perspective stems from his sitting on ‘both sides of the aisle.’ For more than half of Larry’s career, he ran buy-side trading desks for Standish Mellon and thereafter, The Boston Company. In both of those roles, Larry was responsible for implementing and managing international equities trade execution. Larry’s perspectives are frequently cited by the leading financial news publishers, including The Wall Street Journal, Bloomberg LP and Reuters

Peruzzi’s Perch is a weekly synopsis of Everything Equities as seen from the perch of Mischler Financial Group’s International Equities Desk. Cited by Wall Street Letter in each of 2014, 2015 and 2016 for “Best Research / Broker-Dealer”, Peruzzi’s Perch is one of four distinctive content pieces produced by Mischler Financial Group.